Democratic hopefuls back tax increases

February 13, 2004|By Liam Ford, Tribune staff reporter.

Laying the blame for the federal budget deficit at President Bush's feet, Democratic candidates for Illinois' open U.S. Senate seat said they would balance the nation's books by increasing many taxes cut in recent years.

At the same time, most of the leading Democratic candidates to replace U.S. Sen. Peter Fitzgerald (R-Ill.), who is stepping down next January, said Bush's proposed budget fails to increase spending on the types of programs they consider important.

"George Bush is the most fiscally irresponsible president in the history of our country and his new budget is full of special interest giveaways," said former securities trader Blair Hull.

Hull's criticism of Bush typified the comments of Democrats vying for their party's nomination in the March 16 primary, which came in response to a Tribune questionnaire on federal budget issues and the government's $521 billion deficit.

Hull and all the other leading candidates--state Sen. Barack Obama, state Comptroller Dan Hynes, former Chicago Board of Education President Gery Chico and Cook County Treasurer Maria Pappas--attacked the Bush administration's tax cuts as primarily benefiting people with higher incomes.

"The cost savings we would generate by limiting tax cuts to those with lower and middle incomes could be used to fund programs and initiatives that address the nation's most pressing needs," Hynes said.

Two of the candidates, Chico and Pappas, however, said they would make permanent part of Bush's phasing out of the estate tax. Chico proposed that only estates worth $2 million or more be taxed, and Pappas said that the current phase-out should be stopped in 2009, when estates worth $3.5 million or more will be taxed.

At the same time, all the contenders said they want to provide tax relief for "working" or "middle-class" families, without defining income brackets for those categories. Pappas, Obama, Hynes and Chico all said they support making permanent the tax cuts that benefit those other than those in the highest income brackets.

Hull, however, said he supports repealing all of the Bush tax cuts, and replacing cuts for middle- and low-income workers with a proposed Simplified Family Tax Credit. The tax credit "would replace 200 pages of the tax code with a single 12-line form and provide tax relief to working families," Hull said.

All of the candidates positioned themselves as deficit hawks, agreeing that the tax cuts and pork-barrel spending have ballooned the deficit. The candidates differed on which specific programs they would target first for elimination, while Hynes advocated re-instituting spending caps or "pay-as-you go rules" and Obama supported giving the president line-item veto power to eliminate spending programs.

Pappas, who said cutting special-interest spending is the "centerpiece" of her candidacy, listed 10 programs she would change, including joining Obama in proposing hikes in fees on mining and other companies that operate on federal land.

Obama also proposed that the federal government eliminate water subsidies for agricultural businesses grossing more than $500,000 per year, "reserving the program for the small farmers it was designed to protect."

Both Pappas and Hull cited $50 million in tax money going to create an "indoor rainforest" in Iowa as a prime example of the type of spending that should be eliminated.

Meanwhile, Chico and Hynes attacked Bush's proposed Mars mission, and Obama and Chico derided increased military spending. Obama said cutting the Cold War-era Javelin Missile program would save $440 million in three years, and he said as much as $10 billion could be saved by cutting missile defense system research.

While attacking spending projects for other states and subsidies for corporations, all the candidates cited several programs that they believe need increased spending.

Most notably, all five attacked Bush for underfunding the centerpiece of his education policy, the No Child Left Behind Act. Chico, the only one to cite a specific shortfall in funding for the program--$9.4 billion--said the program must be fully funded "if schools are to have the resources necessary to improve." Several of the candidates mentioned other education spending programs they said should receive more tax dollars, with Obama, Hynes and Hull all citing the Head Start early-childhood education and day-care program as worthy of increased funding.

Chico cited bringing home a larger share of federal tax-supported road-building subsidies to Illinois as a way he believes jobs can be created.

Obama and Pappas both said the federal government should keep or increase the level of funding for federal Section 8 housing vouchers rather than decrease it from 2004 levels--though Bush's 2005 proposed housing voucher program is still $1 billion above 2003 levels.While all of the candidates said they oppose instituting a flat tax or a national sales tax--two proposals put forward by free-market think tanks and Republicans--all said some changes need to be made in the federal tax code. Hynes, Hull and Obama said the code should be simplified, while Pappas, Obama and Hynes advocated making it illegal for corporations to avoid federal taxes by incorporating in low-tax foreign countries.